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If you are moving to start a new job or business or go to university, you may be able to deduct your moving expenses from your taxable income and save money in the process. But be careful, it can be a tricky business.

 
You are eligible to claim moving expenses if:

  • You are an employee or are self-employed and moving to start a new job within Canada.

The Catch: You must earn income at the new job and your new home must be at least 40 kilometres (km) closer to your new work location that your previous residence.

  • You are employed or self-employed and either moving to start a new job either from outside Canada to a location within Canada, to a location outside the country from inside Canada or from two locations outside Canada.

The Catch: You must be a deemed or actual resident of Canada, and have moved from one place where you ordinarily reside to another place where you will ordinarily reside. You cannot keep a residence in both locations. You must also earn income or self-employment income at the new job, and the new home must be at least 40km closer to your new work location than your previous residence.

  • You are a student moving to attend a post-secondary institution inside or outside Canada.

The Catch: You must be a full-time student who was required during the year to include in income a scholarship, bursary, fellowship or research grant.
You must also live 40 km closer to your new educational institution that your previous did before the move.

So, what can you deduct? Quite a few expenses, including:

  • Travel, including vehicle expenses, meals and accommodation;
  • Cancelling a lease;
  • Transportation and storage of personal effects;
  • Meals and accommodation for 15 days near either residence if your moving dates do not coincide;
  • Selling your old residence, including real estate agent commissions. (If you rented your previous residence, you cannot claim expenses related to the purchase of a home in the new location);
  • Legal work related to the sale of one house and purchase of another, as well as the land transfer tax for the new home;
  • Mortgage penalties;
  • Advertising;
  • Utilities disconnection/reconnection, and
  • Mortgage interest, insurance, property taxes and utilities associated with old residence while attempting to sell it, up to a limit of $5,000 for maximum three-month period.

You cannot deduct:

  • A loss on the sale of your previous home;
  • The cost of work done to your former residence to make it easier to sell or to meet a landlord's standards in a rental;
  • Expenses for house-hunting or job-hunting trips;
  • The value of items movers refused to take, such as plants, frozen food, ammunition, paint, and cleaning products;
  • Costs to replace such personal-use items as tool sheds, firewood, drapes, and carpets;
  • Mail-forwarding;
  • Costs of transformers or adapters for household appliances, or
  • Costs incurred in the sale of your old home if you delayed selling for investment purposes or until the real estate market improved.

In calculating your deduction, you must subtract any moving grant, allowance or reimbursement you received from your employer or a government department from your eligible moving expenses.

Keep receipts and documents supporting your claims. You do not have to include those documents in your tax claim but the CRA may want to see them at a later date.

If you are given a lump sum, your employer is required to withhold income tax and other deductions if the amount is being released directly to you.

The deductions are reasonably straight forward, but there are some complicated rules that go with them. For example; if you paid for your move in the year after you relocated, you cannot carry back those expenses to the return for the year of the move. That's even if you earned employment income or self-employment income at your new job during that year.

You may, however, carry forward any unused amounts and deduct them against eligible income in the following years. In addition, there is more than one way to calculate your expenses. Rather than adding up all your receipts to calculate your expenses, which is called the detailed method, there is a simplified method that you can use that often results in a greater deduction.

If you've relocated or are planning to relocate in order to embark on new opportunities, talk to your accountant about how to deduct your moving expenses, and get an idea of just how much money you may be able to save.

JUST FOR STUDENTS

Students must also meet an additional requirement: They must take at least 60 per cent of the usual course load each semester.

You may only deduct expenses up to the amount that you include on your return as award income, for example, fellowships, bursaries, scholarships and research grants.

If you are a student who moved to start a job, including a summer job, or to start a business, you can claim moving expenses.

And if you are enrolled in a co-operative program that requires you to attend school for an academic session and then work for a similar period, you may deduct eligible moving expenses from income earned at your new work location. When you return to school, you may only claim moving expenses against your award income.